Sedemac Mechatronics IPO: Check brokerages review, GMP, subscription and other details

Synopsis Sedemac Mechatronics' Rs 1,087 crore IPO opens amid weak grey market sentiment, with a discount indicated. The offer is entirely an offer for sale, meaning the company receives no funds. Valued at Rs 5,971 crore, the company designs electronic control units for mobility and industrial uses. Sedemac Mechatronics' IPO will open for subscription on Wednesday amid weak grey market sentiment, with the GMP indicating a discount to the issue price. The Rs 1,087 crore IPO is entirely an offer for sale of up to 80,43,300 equity shares by existing shareholders, and the company will not receive any proceeds from the issue. The price band has been fixed at Rs 1,287–1,352 per share, with a market lot of 11 shares. The issue will close on March 6 and the stock is proposed to be listed on the BSE and NSE. At the upper end of the price band, the company is valued at a market cap of around Rs 5,971 crore. The issue is split with 50% reserved for qualified institutional buyers, 15% for non-institutional investors and 35% for retail investors. Sedemac is a Pune-based technology company that designs and manufactures control-intensive electronic control units (ECUs) for mobility and industrial applications. Its portfolio includes integrated starter generator (ISG) ECUs, electronic fuel injection (EFI) ECUs, EV motor controllers and genset control units. The company has strong exposure to the two- and three-wheeler segment and derives a large share of revenue from a handful of OEM clients. Live Events On the financial front, revenue from operations rose from Rs 423 crore in FY23 to Rs 658 crore in FY25, while profit after tax increased sharply to Rs 47 crore in FY25 from Rs 6 crore in FY24. EBITDA margins expanded to 18.4% in FY25 from 11.2% in FY23. For the nine months ended FY26, revenue stood at Rs 771 crore and PAT at Rs 71 crore. However, the offer comes at elevated valuations. Based on pre-issue capital and the upper price band, the stock is valued at a trailing P/E of around 126.9 times FY25 earnings. Should you subscribe? Brokerage views on the IPO are divided. SBI Securities has recommended subscribing to the issue for the long term, citing the company’s leadership in control-intensive ECU technology, strong market position in ISG ECUs and genset controllers, and innovation-led growth backed by in-house R&D. The brokerage noted that revenue, EBITDA and PAT clocked annualised growth of 34%, 64% and 123% respectively between FY23 and FY26E, and believes the critical nature of the product portfolio and OEM approvals create high entry barriers. However, it cautioned that listing or short-term gains are unlikely. In contrast, Swastika Investmart has assigned an "Avoid" rating to the IPO. The brokerage flagged that while profit recovery in FY25 is encouraging, it comes off a low base in FY24 and requires further consistency. It also highlighted that at around 127 times trailing earnings, the issue leaves little margin of safety for investors. Swastika further pointed to risks including high customer concentration, with a significant share of revenue tied to a few OEMs, and heavy reliance on the mobility segment, which accounted for the bulk of revenue. With the grey market premium currently negative, sentiment ahead of listing appears cautious. Investors will weigh the company’s strong positioning in niche control electronics and improving profitability against rich valuations and concentration risks as the three-day issue progresses. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times) (You can now subscribe to our ETMarkets WhatsApp channel) (What's moving Sensex and Nifty Track latest market news, stock tips, Budget 2025, Share Market on Budget 2025 and expert advice, on ETMarkets. 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